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When exploring solutions to income inequality policy makers pay close attention to the costs. The cost of healthcare. The cost of food. The cost of child care. The cost of housing.

What about the cost of energy?

According to the Bureau of Labor Statistics, in 2012 the average U.S. family spent over $4,600 or about 9 percent of their budget to heat and power their homes and fuel their vehicles. Families in the bottom fifth of income earners spent nearly 33 percent more of their budget on energy costs than average $2,500 a year or 12% of their annual budget.

Reference the chart to the left and you will find that low-income families spend two and half times more on energy than on health services. Unlike food and housing, consumers cannot shop around for the lowest cost energy. Bargains can be found in the supermarket, but, prices at the pump do not vary from one station to the next. Conservation similarly is not an option when it’s a choice between driving to work or saving a gallon of gasoline.

A solution to remedying income inequality is tackling rising energy costs. The U.S. Energy Information Administration projects the price of electricity will rise 13.6 percent and the price of gasoline by 15.7 percent from now until 2040. Rising global demand, aging and insufficient energy infrastructure and restrictive government policies all play a role in increasing costs.President Obama has the ability to reverse this trend and lessen the blow to all consumers.

Take the shale gas boom for example. Increasing access to private and state lands and sound state regulatory programs have boosted production of natural gas and led to a significant lowering of prices. IHS CERA predicted that the shale revolution lifted household income by more than $1,200 in 2012 through lower energy costs, more job opportunities and greater federal and state tax revenues.

Policy makers should promote responsible energy development with the knowledge that it will have a positive affect on even the most vulnerable. The president has the power to act. Permitting energy infrastructure – including the Keystone XL Pipeline, opening new offshore areas to oil and natural gas development, and finalizing the nuclear waste confidence rulemaking, could transform the energy economy.

If policy makers want to take meaningful action to help our nation’s low income families, they must pursue actions that help lower – not raise – the cost of energy.

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David Holt is President of Consumer Energy Alliance, serving in this position since January 2006.
As the voice of the energy consumer, Consumer Energy Alliance works to increase domestic energy production and reduce consumer energy prices. CEA seeks to motivate and provide a voice for consumers interested in vital public issues, such as responsible access to available natural resources; power generation; impact of energy prices on business, agriculture and consumers; development of a robust, domestic renewable energy industry; and utilization of new technologies that allow for higher levels of energy efficiency and conservation.
With more than 220 consumer and energy affiliate organizations representing every sector of the American economy, and 300,000-plus consumer advocates, Consumer Energy Alliance continues to expand dialogue and develop joint messaging among the energy and consuming sectors through its various activities.
David is a Professor with Norway’s Nordland University Graduate School of Business, Master of Science in Energy Management Program, in cooperation with the International Institute of Energy Policy & Diplomacy at the MGIMO University in Moscow, Russia.
He serves on the board of Consumer Energy Education Foundation and the St Anne Foundation. David is also a member of the Texas Bar Association and the Houston Bar Association. Read Bio

Energy by the Numbers

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